The Exchanges

Q So Nexus has a, A huge view on edtech, and that's why we see a number of portfolio companies. So can you take our listeners through the portfolio companies of Nexus in edtech sector?

A We're the first investors in an academy, which started as a live learning platform for test prep and later expanded into k-twelve, um, and, and other categories. Um, we are early investors in white hat junior, uh, which is a k-seven, uh, education company where you are teaching coding, uh, or logical reasoning. To kids. Uh, we are the, we are early investors in quizzes, which is a global tool for teachers to, uh, to, to, to engage with students better. Uh, and, and they are present, uh, across many, many, uh, schools in, uh, in Southeast Asia, us, and now in India as well. Uh, we are investors in Newton school, uh, which is, which is a, uh, upskilling slash reskilling company, uh, where you teach coding, uh, to college graduates and make them employable, uh, and, and, and high quality, uh, coders for companies to hire. And we're investors in turtles, uh, in, in talent sprint, which is a, uh, which is a upskilling company, uh, where, uh, where people in the, people in the, People who are already doing jobs and they want to reskill and upskill and, and, and, and, and get better jobs or, or, or, or do better in their, uh, in their company, uh, can learn, um, and, and acquire, acquire job ready skills. So, so, so we are investors in, in, in lots of education companies across the, uh, stack. Um, and, and this has, this is coming, this is working out well for us, especially in these …

AI assessment note: “We're the first investors in an academy... early investors in white hat junior”

Q before. Uh, there have been parallels to payment and demonetization, but, but today is, is very different for edtech sector. I would say the tailwinds are more stronger. It's the only sector which has seen a huge inbound growth in terms of number of users, as well as huge monetization. So, so can you, uh, uh, share your thoughts on, on why is that happening right now in edtech sector?

A Yeah. So I think there, there are a few things that happened, um, in, uh, in the ecosystem over the past three, four years, uh, that made the timing right. Uh, so, so it was a confluence of, uh, smartphone penetration increase, uh, uh, faster internet, uh, because of Jio, uh, payment infrastructure being large enough, uh, and, and, and, and payment penetration in the country being large enough. Uh, so because of these reasons, there was, there was already Uh, there's already a set infrastructure for education companies to grow on now because of COVID, of course, uh, because people are, people are sitting at home. Uh, the only way to learn is to experiment. The only way to learn is to, is to learn online. And people have been forced to think about learning online. Uh, and, and, and when they have experimented for some time, you realize that, Hey, it's, it's actually, it's actually good. It's, it's not at all bad. Uh, I would argue over time, people should, people should think about a tech as even better than, uh, the, the offline education that they were getting. Because of, uh, because of democratization of content, uh, from the supply side, because you can, you can get the best suppliers or best supply of content, uh, very easily now, uh, given, given, given the large distribution of a lot of education companies and, uh, as creation tools are improving and as people are learni…

AI assessment note: “confluence of, uh, smartphone penetration increase, uh, uh, faster internet, uh, because of Jio”

Q Do you, do you see that becoming a billion dollar space in India?

A Yeah. So, you know, so this is a unique space and unique opportunity because there is, there is very, very high, uh, supply of people who want to learn. See, I think 6.5 million people graduate out of colleges in India every year. Uh, but the number of, uh, number of new white collar jobs being created every year is maybe, maybe less than 10% of that. Uh, so unlike us where the college education is not a compulsory thing in, in people's mind. In India, many folks try and go to colleges. And so the supply is high. But most colleges are not able to impart job skills to, to people. And after you are graduating, you are not ready for a, for a, for a white collar job. Now that leads to a gap in the market where can you create high quality education service for them where you are unbundling all the other experiences of college, but just taking out the, the, the, the, the, the vertical where you are helping Students, uh, learn the skills that are required to be successful in the job. Uh, and Newton School is getting to that, that, that, that, that, that supply. On the demand side, the demand for software engineers is increasing super fast. And we do not have, we do not have enough supply in the country. In fact, the global demand is also increasing very fast while, while the supply of talent pool across the world is a challenge. And as remote work becomes the, uh, becomes a new standa…

AI assessment note: “Yeah. So, you know, so this is a unique space and unique opportunity”

Q as you, as you shared, you know, uh, earlier in the podcast, like, uh, an academy is doing a hundred crores in monthly revenue. Uh, when did it become mainstream for consumers to pay for education on mobile? When did, when did this shift happen? It's a very sudden shift and people don't believe that this has already happened. And, and what, what, what, where is it going from here?

A Yeah, so interestingly, I would argue we are, we are still on the, uh, still at, still at day zero here. Uh, of course, because of, as we discussed, because of improved smartphone penetration, improved, uh, internet penetration, payment infrastructure, et cetera, uh, there, there is some shift, uh, but, but, but, but if you take a 30,000 feet view, you will see that, well, well, the, the, the total, the total penetration of a tech in the test prep market is, is maybe less than, less than 2.5%, less than three percent. Uh, because the total market is already to ten million dollars, and, um, and, and it tick, uh, in test prep would be perhaps two hundred million dollars types. Um, uh, when you, when you look at k-twelve, uh, you will see that the penetration is perhaps, um, is, is, is less than four, five percent. Uh, uh, so, so, so we, we, we know that, that, that, that, that there's a, there's a long road ahead And, and, and as we discussed earlier, the market size expansion will also happen. So, so this is really day zero. Um, and, and we are just, just seeing the early rockers right now. And, uh, I strongly believe that in the, in the next five, 10 years, uh, we should see multiple five billion dollar, ten billion dollar revenue companies coming out of India, uh, uh, in education. Uh, because, uh, because, because this is the need of the art and, and we have, we, we, we don't…

AI assessment note: “I would argue we are, we are still on the, uh, still at, still at day zero”

Q even Anthem is, let's crack it, uh, has, has been one of the, the largest, Sectors in India, like Bansal classes in Kota for IIT, Chanakke in Delhi for IS, Ireland for medical, uh, NET exams. Can, can you throw some light on this sector when, before it was getting replaced or disrupted by ed tech companies? How big was this sector? If you can show some numbers on it.

A Yeah. So reports say that, uh, test prep market in India is a eight to ten billion dollar market. And you may mention a lot of names and there, there are other, there are other names for other exams and, uh, as well. And, and there are many decently sized city-based state-based companies here. At the end of the day, it's a very local business. Um, and, and people, people travel from across the country, but by the end of the day, a lot of times it's very, it's very concentrated in, in one city or two cities or three cities. Um, so, so at the end of the day, we have to, we, the way I think about it is a lot of exams that we have in the country are really a gateway for middle class or lower middle class people to get opportunities. And that is why everyone in India is trying to either become a, uh, become, become a civil servant or Um, or, or get into, uh, get into, um, uh, the top engineering colleges, the top medical colleges, um, CA, and so on. So all these, so, so there is huge demand for preparing for these tests, because this is seen as a way, uh, this is seen as a ticket, uh, out of, uh, out of, uh, uh, out of, uh, lower middle class, middle class, upper middle class, to, to, to, to transcend orbits, uh, in socioeconomic status. Now the challenge I, the challenge we always felt, and I, I went to one of the top coaching institutes, um, in, in Kota, uh, for, uh, for preparati…

AI assessment note: “test prep market in India is a eight to ten billion dollar market.”

Q Just to take a pause there, I would love to share with our listeners your background, which city do you come from and, and your family background, what does your father used to do or does?

A So, uh, I was born in Patna. Uh, majority of my family, uh, is, is still in Patna. Uh, we are, we, as a, as a family, uh, we, we come from Rajasthan. Uh, Poddar, uh, is, is Sandi of Pod and Dar. And we were originally ship traders. Poddar means ship traders. And we, we are, we are from Rajasthan. Uh, but, but a lot of us shifted to, uh, Patna, uh, about 45 years back. And, and I was born in Patna. Um, And, and did my early education there. And then I, then the family moved to Jaipur. And where I did my, where I completed my high school and, and, and, and my, my, my father is a businessman. Like everyone in my family. So we are a joint family across the board. We have 55 brothers and sisters. Um, and most, most of my family members are businessmen, running shops, running factories, um, having trading, uh, agencies, and so on. Very early on, again, I was privileged that way, that most of them started, uh, working in the shops, uh, when they were very young. So when you're in class, 10th, 11th, uh, you go to school and, uh, and you go to, uh, and you complete your degree, uh, but you start going to the, And, And you start learning the tricks of the trade. Because I was too studious when I was very young And, and, and because I had the opportunity given, given the family had started to do significantly better by the time I was, I was, I was, I was in class eighth, ninth. I had the …

AI assessment note: “I was born in Patna... my father is a businessman. Like everyone in my family.”

Q 2000 students in a batch. Uh, in live classes, especially, there is no personal attention, like they used to be in offline classes at Bansal, because you have been at Bansal, I have been at Bansal for IIT JEE preparation, where the back sizes are 6200, and a teacher could see in the student eyes. How do you replace that? Is it replaceable, or are we just ignoring that part?

A So, yeah, the way I think about it is that it's, it's, it's not, it's not right for us to compare one-on-one here. Because the way I think about it is Bansal, ah, when, in Bansal classes when you had 60 students in, in one room, I'm not sure if, if the teacher was able to talk to every student anyways, ah, and in top batches, the attention was of course better, but as you go down in the, ah, in the, in the value chain, you will realize that, that the experience was definitely not as good. Ah, in, in a lot of these, ah, in a lot of these tech companies where one is to 501 is to, one is to thousands, one is to thousand, um, um, Uh, learning is happening. Uh, it's not that it's only content where many thousand learning is happening. You have TAs and mentors who are helping you learn as well. So it is, it is really the paradigm of education then changes that the lecturer is different from Uh, from, from, uh, doubt solver to is different from mentor, uh, which, uh, which, uh, which is effectively unbundling of the different roles that the teacher standing, uh, on the podium in the offline coaching institutes who are doing. Uh, and that is why, uh, the experience here could actually be better because you are learning from the best teacher who knows how to teach, who has, who has deep understanding of the subject and pedagogy by Uh, for solving your doubts or for getting that personal…

AI assessment note: “effectively unbundling of the different roles that the teacher standing on the podium”

Q And is White Hat opening up to other streams also besides computer programming?

A Yes. So, uh, the, the intent is always to capture the higher order thinking space, uh, and, uh, uh, and it just business-wise as well, it just makes logical sense, uh, that, that, that, uh, that, uh, it's, it's an easy way to expand into other categories and either upsell, um, And cross sell to the same student or, uh, because it's a, it's, it's a, it's a family decision. Uh, one, one, one kid might be interested in one course or the other kid might be interested in other course, but, but so, so they will expand into other categories, uh, like robotics space, et cetera. Uh, but, but the intent is to be very, very focused and, and make sure that everything we launch, we deliver high quality, uh, experience to the parent and the kid and, and then PS is super, super high. So we do not want to, Uh, we do not want to spread ourselves truth in, and it just, and ensure that every class, uh, and, uh, every class is a phenomenal experience for the kid.

AI assessment note: “so they will expand into other categories, uh, like robotics space”

Q Can you share how, how did you discover White Hat? How did you develop thesis? Because it's a very unconventional sector. They, they were not replacing anything in the industry and Academy was replacing the, uh, offline IIT coaching, test coaching, and now K-to-L, but, uh, White Hat is a new concept. How, how did you, uh, came in touch with the founder? What were your thesis when you invested?

A Uh, again, when you meet Karan, you, you will understand his, his, his, his aggression. Uh, and, uh, and, uh, and, uh, you, you can see that he'll deliver to, he'll deliver with speed and precision. So when, when we were chatting about, uh, about White Hat for the first time, um, and again, it was an idea stage company. Um, we, the, the, the discussion was more around, uh, A, building the team around Karim, because, uh, because at that point of time, he was the single founder, uh, who had just started the company. Um, and B, Uh, it was around where this can go, uh, because there could be, uh, there is a, there is a real, uh, risk that this could be a niche rich people, uh, product. Uh, and while we were iterating on the idea with Karan, uh, we unearthed that the market is, is yet to be created. There is a lot of latent demand, uh, that, um, latent demand in the market. And when you're talking to people, you're getting a sense That this is, this is one course that they want to take for their kids. Uh, and you could also see that there's an appetite to pay. And the third thing, uh, is that there's no second best alternative. Now, when, when, when, when, when, when these things are there, there is, you, you know, that there is a potential to expand the market. If you can create a right offering and current being a, uh, superb, uh, marketer and superb operations guy. Uh, you could,…

AI assessment note: “we unearthed that the market is, is yet to be created. There is a lot of latent demand”

Q And if you can share, right, what have been your biggest successes that you sourced and bad, and what have been some of the failures on the journey that humbled you?

A Um, So maybe I'll share, I'll share Rapido's example. So I met Rapido Aravind for the first time the week I got offer from Nexus. I had not even joined Nexus. And that was the, that was, that he was building the carrier then. Oh, I see. And, and I liked him then as well. Then that business model did not seem right, but he evolved into a bike taxi company. That was also Uh, at the end of the day, felt a challenging, debatable idea. Why should Ola and Uber not be able to do it? Um, there's, it's very competitive. Every investor is in either Ola or Uber. How would the, you raise capital in future? Uh, but thankfully, um, we stayed in touch, and the company evolved, and, uh, and when there was, when the traction was there, when some sort of network effects was being proven, When the market had opened up and, and there was more access to capital, ah, in the Indian ecosystem, it was just, it felt the right time to invest.

AI assessment note: “So maybe I'll share, I'll share Rapido's example.”

Q And, and what, what does the, you know, uh, because for every product you are backing, there are 10 other products or companies out there. So what, what is so special about the entrepreneurs that Nexus is backing when you think they think product first, if you can go deep, what would, what does it mean?

A Yeah. So, uh, it's actually, um, when you, when you, when you, when you hear about it, it's not obvious, but when you are in that room, it's very, very obvious, uh, for most companies, for most, um, For most high quality product entrepreneurs I have met, uh, during the entire discussion, uh, for every problem, uh, you are proposing, all startups have risks. So during, during the discussion, we'll discuss about all the risks, uh, as well. Uh, but every problem you are proposing, the thought process is very product driven. And it's a, it's a, it's a founder skill that we truly, truly crave for. In most cases, a lot of these guys would not be thinking about solving problem by, by throwing money at it or by throwing people at it. And I think that is a unique, that is a unique trait, uh, that I find in a lot of Texas entrepreneurs, uh, that, that we love backing.

AI assessment note: “not be thinking about solving problem by, by throwing money at it or by throwing people”

Q if, because you have invested in so many ed tech companies and seeing a huge amount of success, what are the qualities, you know, if you can, uh, share that you are looking for an ed tech entrepreneurs who are solving an ed tech, like one, you already shared that they have to be product focused. Any other insights that you have, which, which will be useful for our listeners?

A I agree. We have been super, super bullish on education, um, as a space. Um, I often say this, that education is one market, which has both scale and monetization. Some, some verticals have space, some verticals have monetization, uh, but education is one vertical, uh, which, which is, which is phenomenal that way. And I truly believe that we should see multiple multi-billion dollar revenue companies being created out of, uh, created in education out of India. And, and I also make this argument often that, um, in U.S. Uh, the tech companies are catering to a very thin sliver of the market because of the existence of public and private infrastructure of education. Uh, in India, the entrepreneurs are creating, are really creating their infrastructure from bottoms up, uh, full stack. Uh, and, and that is, and that is why phenomenal value will be captured in India, uh, like it has happened in China. Um, because, because, because there's infinite demand, uh, and, and that's the way, um, because there's very, very, because there's very high demand, um, and, and there's no existing infrastructure. Now, when we look at, uh, education entrepreneurs, as you mentioned, we, we think about the product first approach and the, uh, and, and the scalability of the model. You know, it's not as easy to get customers love Because at the end of the day, from a customer's perspective, there are almo…

AI assessment note: “we look for that maniacal focus and customer obsession for creating high quality”